"Operating results of the [shopping-center REIT] have been good, and will continue to be good," says CEO Dan Hurwitz. The consumer has been resilient, he notes, and the supply/demand dynamic heavily favors landlords, with few new shopping-centers planned or hitting the market soon.

REIT investors typically focus on net operating income and funds from operations, a measure of net income that excludes depreciation. Historically, net operating income at shopping-center REITs has risen by 1% a year, but DDR is on track to boost NOI by 2.5% to 3% annually in the next five years as the company adds higher-quality tenants at elevated rents.

Funds from operations, meanwhile, have been growing modestly but steadily in recent years, from 97 cents a share in 2011 to $1.03 in 2012 and $1.11 in 2013. DDR forecasts FFO of $1.14 to $1.18 a share this year, a range lowered by three cents after the REIT's $343.6 million sale earlier this month of its stake in several Brazilian malls. DDR pays a 62-cent dividend, for a yield of 3.8%.

DDR trades for 14 times Wall Street's consensus estimate of $1.17 a share in 2014 FFO. That puts its valuation at the low end of the shopping-center-REIT universe. Likewise, shares are selling at a 13% discount to the consensus estimate of the net asset value of the company's real estate.

DDR nearly collapsed during the financial crisis of 2007-08, a victim of excessive leverage, international expansion, and complex entanglements in joint ventures. Shares plummeted from a high of $65 in 2007 to a low of $1.25 in 2009. The board sold 30 million shares that year to Alexander Otto, a German shopping-center magnate, for $112.5 million, at $3.50 and $4.00 a share. The Otto family now controls 16% of DDR's shares.

Hurwitz, 50 years old, was promoted the following year to CEO from president. On his watch, the REIT has sold properties, reduced debt, and upgraded its tenants. "This management has been in place for four years, and has done all the right things," says Jason White, an analyst with Green Street Advisors.

DDR's debt has fallen to 7.5 times Ebitda, or earnings before interest, taxes, depreciation, and amortization, from a high of 10.2 times in 2009. Management aims to reduce the ratio to under 6.5 times in the next five years, which could help the REIT earn a higher credit rating than the current Baa2/BBB-. White would like DDR to reduce its debt even more aggressively, to around 5.5 times Ebitda, to better position it for the next recession.

The Bottom Line

DDR's shares have fallen 7% in the past year, to $16.24, while the S&P 500 has rallied nearly 20%. As fundamentals improve, the stock could climb to $20.